Bangladesh The clean-up

The costs of fighting corruption

“THE problem is that the mafia in Bangladesh were the political parties,” correctly observes a political analyst stuck in one of Dhaka's notorious traffic jams. At the roadside, the billboards—once a thriving business run by Tarique Rahman, the elder son of Khaleda Zia, prime minister until October last year—are empty. The luxury cars that used to ply the streets carrying bodyguards protecting members of the former kleptocratic elite are nowhere to be seen. Ten months into Bangladesh's state of emergency, the army-backed government is making headway in its drive to crush the two patronage-based personality cults that used to constitute Bangladeshi politics.

Both the heads of the two main political dynasties, Mrs Zia of the Bangladesh Nationalist Party and Sheikh Hasina Wajed of the Awami League, are in detention, along with more than a dozen former cabinet ministers. The bosses of many big companies are also in the clink or on the run. Senior officials say that some 200 top-level targets are being prosecuted.

This week the president of the World Bank, Robert Zoellick, in the course of a “listening tour” in South Asia, came to monitor progress in a country where, until recently, dishonesty in public life was so prevalent that Bangladesh regularly topped the world's corruption league tables. The institution Mr Zoellick heads is not well liked here. Economic nationalism is strong; the bashing of multilateral lenders is a hobby of the chattering classes. Even the country's foremost economist, a Nobel prize-winning microcredit pioneer, Mohammad Yunus, had few kind words for the bank. Following a meeting with Mr Zoellick, he told reporters that it should sharply increase the proportion of its total lending devoted to microcredit programmes. Mr Yunus also called for institutional reform of the bank, whose country offices “are working like post offices waiting for directives from headquarters”.

Despite all this, aid is piling in. Soon after “1/11”, as Bangladeshis call the declaration of a state of emergency on January 11th this year, donors saw a window of opportunity to speed up the process of turning impoverished Bangladesh into a middle-income country.

Just this week the Asian Development Bank approved a $150m loan for a good-governance programme. Much of the money will go towards strengthening one of the country's busiest institutions—the Anti-Corruption Commission. It is a race against time, says its head, Hasan Masud Chowdhury. According to its swanky new brochure, the commission aims to build a reputation of being able, like the Mounties, always to get its men. Since it is equipped with sweeping emergency powers to arrest, search and detain, there is little doubt that it will. Five special courts are not enough to deal with the flood of cases, and more are being created.

The politicians are due back in less than 12 months, by when the interim administration has promised to hold general elections. Shamsul Huda, who heads the election commission, insists that it will be ready. Progress has been made on creating a new voters' list (complete with photographs) of some 80.5m names. The commissioner wants the government to lift the state of emergency in January, two months before elections are scheduled for five municipal corporations (former “dens of corruption”, Mr Huda calls them).

Meanwhile, the negative short-term consequences of the anti-corruption drive have become apparent. Foreign and domestic investment has stalled. Garment exports have plummeted. Last week the central bank sold $80m of its foreign reserves to finance oil imports. Strong remittances keep the economy afloat. But inflation is at a ten-year high. Student-led riots flared in August. The next flashpoint may not be far off.

For the regime, the anti-graft drive has had some useful side-effects. The intelligence services are systematically acquiring shares in private media companies, by offering the release from detention of their owners in return. Mr Zoellick called for a transparent battle against corruption, consistent with the rule of law. That will be a long, hard struggle in Bangladesh. #

First published in The Economist, London on Nov 8th 2007